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EXHIBIT 10.28
MANAGEMENT, OPERATING AND STOCKHOLDERS AGREEMENT
OF
OLEFINS TERMINAL CORPORATION
This Management, Operating and Stockholders Agreement of Olefins Terminal
Corporation ("Agreement") dated effective as of May 1, 1997 by and between D-S
Splitter, Inc., a Delaware corporation ("D-S") with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Ultramar Diamond Shamrock Corporation, a
Delaware corporation and the parent of D-S ("UDSC") with offices at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; JLM Industries, Inc., a Delaware
corporation ("JLM") with offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇; Olefins Marketing Inc., a Delaware corporation and an affiliate of JLM
("OMI") with offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and
Olefins Terminal Corporation, a Delaware corporation ("OTC") with offices at
Houston, Texas. OTC is sometimes referred to herein as the Company"; UDSC is
sometimes referred to as the "Guarantor"; and D-S and JLM are sometimes referred
to herein collectively as the "Stockholders". OTC, UDSC, D-S and JLM are
sometimes referred to herein collectively as the "Parties".
WITNESSETH:
WHEREAS, Union Carbide Corporation formerly known as Union Carbide Chemicals and
Plastics Company, Inc. ("UCC"), D-S, JLM, ▇.▇. ▇▇▇▇▇▇▇ and Associates, Inc.,
("Statham") and OTC entered into a Note, Stock and Warrant purchase agreement
dated August 15, 1991 (hereinafter called the "Purchase Agreement") pursuant to
which D-S, JLM and Statham purchased shares of common stock of OTC, UCC
purchased a warrant for the purchase of shares of common stock of OTC and UCC
and the Stockholders and UCC purchased subordinated notes of OTC ("Subordinated
Notes);
WHEREAS, OTC on August 15, 1991 entered into a Credit Agreement with Bank of
America National Trust and Savings Association ("Bank of America") as agent for
the banks (as such term is defined therein) party thereto (the "Agent") under
which the Agent agreed to make available to OTC a term credit facility and a
debt service facility (together, the "Credit Facility");
WHEREAS, the Company used the proceeds from such purchases and from the Credit
Facility to finance the development and construction of a polymer grade
propylene storage and terminal facility (the "Facility") located at Seabrook,
Texas on property owned by Baytank (Houston), Inc.;
WHEREAS, in connection with the Credit Facility, D-S, UCC and JLM entered into
the Support Agreement dated August 15,1991 (the "Support Agreement") for the
benefit of OTC and Bank of America pursuant to which D-S, UCC and JLM each
agreed to
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invest in OTC certain additional amounts to be used to fund repayment of OTC's
obligations under the Credit Facility;
WHEREAS, Statham, in anticipation of its dissolution, transferred its shares of
common stock in OTC to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who subsequently died on February 1,
1997;
WHEREAS, on this date OTC has refinanced and repaid its obligations under the
Credit Facility through a $7,300,000.00 non-amortizing unsecured term loan
pursuant the new credit agreement with Bank of America Illinois ("B.A.
Illinois") (the "OTC Term Loan") which UDSC unconditionally guaranteed;
WHEREAS, D-S, UCC, JLM, OTC, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the sole heir of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
deceased ("▇▇▇▇▇▇") and Bank of America have agreed that in connection with
OTC's repayment of the Credit Facility, the Subordinated Notes of OTC held by
UCC will be repaid in full by OTC, and the Subordinated Notes of D-S and JLM
will be canceled; the warrant for shares of OTC common stock held by UCC will be
returned to OTC for the payment of $2,200,000.00 and be canceled; the warrant
for shares of OTC common stock held by Bank of America will be returned to OTC
for the payment of $375,000.0O and be canceled; the common stock of OTC owned by
Statham will be purchased by OTC for the payment of $40,000.00; and UCC's, JLM's
and D-S's obligations under the Support Agreement will be terminated and
extinguished;
WHEREAS, the transactions contemplated with UCC are evidenced by that certain
Agreement dated as even date, by and among UCC, D-S, JLM, Statham and OTC (a
copy of such agreement without exhibits is attached hereto as Exhibit "A");
WHEREAS, the transactions contemplated with ▇▇▇▇▇▇ are evidenced by that certain
agreement dated March 18, 1997, by and between OTC and ▇▇▇▇▇▇ (a copy of such
agreement is attached hereto as Exhibit "B");
WHEREAS, UCC and OTC have executed a new Terminal Agreement of even date whereby
OTC agrees to provide UCC the fully transferable and assignable right to use the
Facilities for up to 100,000 metric tons of throughput of polymer grade
propylene (the "OCC Terminal Agreement")
WHEREAS, as a result of the contemplated transactions, D-S and JLM are the sole
shareholders of OTC and each own 50% of the outstanding common stock of OTC;
WHEREAS, all the parties wish to enter into this Agreement to provide for the
ongoing operation, management and corporate governance of OTC
NOW, THEREFORE, the parties agree as follows:
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OTC OPERATIONS
1. JLM and D-S Contractual Monthly Take-Or-Pays. Effective January 1,1997, the
contractual monthly take-or-pays between OMI and OTC under a Terminal
Agreement dated as of July 22, 1991, and D-S and OTC under a Terminal
Agreement dated as of July 22, 1991, respectively, will be canceled. OMI
and D-S agree that the outstanding take-or-pay balance owed by JLM of
$1,949,365.41 is also canceled. JLM and D-S agree that D-S shall be
entitled to $150,000.00 credit against future throughput at the Facility
for the January and February 1997 take-or-pay payments made by D-S to OTC.
2. JLM Management Fees. On July 31, 1991, JLM entered into a Management
Agreement with OTC ("Management Agreement") for the day to day management
of the Facility. As of this date, JLM is owed the sum of $743,326.00 in
accrued but unpaid management fees under such Management Agreement. OTC,
JLM and D-S agree that such fees shall be paid as of the funding of the OTC
Term Loan. OTC, JLM and D-S agree that all future management fees due to
JLM under the Management Agreement for operating the Facility will be
included in Facility operating costs and OTC shall pay such fees to JLM on
a monthly basis, subject to the terms and conditions of the Subordination
of Management Agreement by OTC and JLM for the benefit of B.A. Illinois.
3. Facility Loading Rates. Effective January 1,1997, OTC, OMI and D-S agree
that OMI and D-S will be charged $16.00 per ton for material loaded at the
Facility. OMI and D-S will each enter into one-year contracts with OTC
terminating December 31,1997 reflecting that each is entitled to the
$16.00 per ton rate for its materials loaded at the Facility. D-S and JLM,
as sole stockholders of OTC, agree that the Board of Directors of OTC as
hereinafter named, or their properly named successors, will develop a
pricing schedule for all users of the Facility, including any future
contracts that OMI or D-S may enter into with OTC for use of the Facility.
Financial Matters.
4. Subordinated Debt. Concurrently with the funding of the OTC Term Loan, the
JLM and D-S Subordinated Notes will be surrendered to OTC marked "canceled"
and the indebtedness evidenced by such notes shall be converted into equity
of OTC in the form of additional paid in capital; and JLM, D-S and UCC
shall instruct Diamond Shamrock Refining and Marketing Company ("DSRMC") as
Escrow Agent to release, relinquish and terminate all liens and security
interests held bv UCC. JLM and D-S against the assets of OTC.
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5. OTC Note to D-S. Upon funding of the OTC Term Loan, OTC shall repay the
$330,000.00 principal plus accrued interest of $10,939.73 due though May 1,
1997 to D-S under that certain promissory note dated December 3, 1996
executed by OTC and payable to D-S according to its terms.
6. The Guaranty of UDSC of the New Credit Agreement. In consideration of UDSC
giving its unconditional guarantee of amounts owed by OTC under the OTC
Term Loan (the "GUARANTY"), JLM of even date has paid to UDSC a one-time
fee of $91,250.00. In addition, so long as UDSC has any obligation or
liability under the Guaranty, D-S and JLM agree that D-S shall have the
right to name two of the three directors of OTC.
7. Support Obligations of JLM and D-S. D-S and JLM agree that so long as OTC
is indebted under the OTC Term Loan to Bank of America or UDSC has any
exposure or liability under the Guaranty, any cash deficits in the
operation of OTC will be met by additional cash investments by JLM and
UDSC. JLM and UDSC agree that upon written call by OTC for cash investments
to meet any cash deficit, JLM and D-S will each pay 50% of the cash deficit
within three business days of such request. OTC, D-S and JLM agree that any
cash surpluses in excess of $1,000,000.00 will be utilized to reduce the
principal balance due under the OTC Term Loan.
8. Security for JLM Support Obligation. If JLM fails to make any payment due
under its support obligation to OTC, D-S and UDSC shall have the right to
make such support obligation payments to protect their interest in the
Facility. As a guarantee of its support obligations and to secure UDSC and
D-S in the event they make the payment of the cash support obligation of
JLM, JLM shall pledge all of its stock in OTC to UDSC. Such pledge shall be
evidenced by a Pledge Agreement, to be executed by JLM, substantially in
the form of the Pledge Agreement attached hereto as Exhibit "C" (the
"Pledge Agreement"). The Pledge Agreement, together with the stock
certificates representing all of the outstanding common stock held by JLM
in OTC and executed stock powers in blank shall be delivered to UDSC upon
execution of this Agreement.
OTC Corporate Governance.
9. Stockholder Agreement. D-S and JLM will execute the Stockholder Agreement
attached hereto as Exhibit "D" and any related document, including the
Amended and Ratified Bylaws attached as Exhibit "E".
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MISCELLANEOUS
10. Dispute Resolution. If there is a dispute between the Parties relating to
an alleged breach of this Agreement or to the business and affairs of the
Company, none of the Parties shall commence any proceeding with respect to,
or terminate this Agreement because of, such dispute until thirty (30) days
after it shall have given a notice with respect to such dispute to the
other Parties; provided, however, that nothing contained herein shall limit
or restrict in any way the right or power of a Party at any time to
commence and prosecute a proceeding for an injunction or other order (i) to
restrain any other Party from beaching this Agreement or (ii) for specific
enforcement of this Article 10. The Parties agree that any legal remedy
available to a Party with respect to a breach of this Article 10 will not
be adequate and that, in addition to all legal remedies, each Party is
entitled to an order specifically enforcing this Article 10.
11. CONFIDENTIALITY
11.1 Confidentiality.
(a) All data, reports, records and other information of any kind
received by a Party or the parent, affiliates, subsidiaries,
stockholders, directors, partners, officers, employees, agents,
representatives, consultants or lenders of a Party (such Party
being hereinafter referred to as the "Receiving Party") from one
of the other Parties or the parent affiliates, subsidiaries,
stockholders, directors, officers, partners, employees, agents,
representatives, consultants or lenders of one of the other
Parties (such other Party being hereinafter referred to as the
"Delivering Party") under this Agreement or in connection with
the transactions contemplated hereby and marked as
"confidential" shall be treated as confidential (collectively,
Confidential Information"). Except as otherwise provided herein,
the Receiving Party shall not use (and shall not permit its
parent, affiliates, subsidiaries, stockholders, directors,
officers, partners, employees, agents, representatives,
consultants or lenders to use) Confidential Information for its
own (or their own) benefit and shall use all reasonable efforts
(and shall cause its parent, affiliates, subsidiaries,
stockholders, directors, officers, partners, employees, agents,
representatives, consultants or lenders to use all reasonable
efforts) to maintain the confidentiality of Confidential
Information. If the Receiving Party or any of its parent,
affiliates, subsidiaries, stockholders, directors, officers,
partners, employees, agents, representatives, consultants or
lenders is required to disclose Confidential Information by or to
any court of
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competent jurisdiction or any governmental or quasi-governmental
agency, authority or instrumentality of competent jurisdiction,
the Receiving Party shall, prior to such disclosure, immediately
notify the Delivering Party of such requirements and all
particulars related to such requirements. The Delivering Party
shall have the right, at its expense, to object to such
disclosure and to seek confidential treatment of any Confidential
Information to be so disclosed on such terms as it shall
determine.
(b) The restrictions set forth in Section 11.1(a) hereof shall not
apply to the use or disclosure of Confidential Information to the
extent, but only to the extent, (i) permitted or required
pursuant to any other agreement between or among the Parties,
(ii) necessary by a Party in connection with exercising its (or
their) rights or performing its (or their) duties or obligations
under this Agreement, the agreements, instruments and other
documents contemplated hereby or the other agreements described
in clause (i) of this sentence, (iii) contemplated by the last
two (2) sentences of Section 11.1(a) hereof or (iv) that the
Receiving Party can demonstrate Confidential Information (A) is
or becomes generally available to the public through no fault or
neglect of the Receiving Party, (B) is received in good faith on
a non-confidential basis from a third party who, to the best
knowledge of the Receiving Party, discloses such Confidential
Information without violating any obligations of secrecy or
confidentiality, (C) is independently developed after the time of
receipt as shown by dated written records or (D) was already
possessed at the time of receipt as shown by prior dated written
records. The restrictions set forth in Section 11.1 (a) hereof
shall not apply to the use or disclosure by the Company of
Confidential Information which consists of data, reports, records
and information relating to its or their business or the
ownership, leasing or use of the properties owned, leased or used
by the Company and which is used or disclosed in connection with
the conduct of its or their business.
(c) For the purposes of this Section 11.1, (i) information which is
specific shall not be deemed to be within an exception set forth
in Section 11.1 (b) hereof merely because it is embraced by
general information which is within such an exception and (ii) a
combination of information shall not be deemed to be within an
exception set forth in Section 11.1(b) hereof merely because
individual aspects of such combination are within such an
exception unless the
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combination of information itself, its principle of operation and
its value or advantages are within such an exception.
11.2 Survival.
(a) Notwithstanding anything contained herein to the contrary, this
Article 11 shall survive the termination of this Agreement for any
reason until the expiration of five (5) years after the date of such
termination.
(b) This Article 11 shall continue to bind a Party which has ceased to be
a "Stockholder" until the expiration of five (5) years after the date
of such cessation.
12. FORUM; CONSENT TO PERSONAL JURISDICTION
Each Party agrees that any proceeding arising out of or relating to this
Agreement or the breach or threatened breach of this Agreement shall be
commenced and prosecuted in a court in the State of Texas. Each Party
consents and submits to the non-exclusive personal jurisdiction of any
court in the State of Texas in respect of any such proceeding. Each Party
consents to service of process upon it with respect to any such proceeding
by registered mail, return receipt requested, and by any other means
permitted by applicable laws and rules. Each Party waives any objection
that it may now or hereafter have to the laying of venue of any such
proceeding in any court in the State of Texas and any claim that it may now
or hereafter have that any such proceeding in any court in the State of
Texas has been brought in an inconvenient forum.
13. NOTICES
All notices, demands and requests required or permitted to be given
pursuant to this Agreement shall be given in writing, shall be transmitted
by personal delivery, by registered or certified mail, return receipt
requested, postage prepaid, or by telecopier or other electronic means and
shall be addressed as follows:
When D-S is the intended recipient:
D-S Splitter, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Manager, Petrochemicals
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When JLM is the intended recipient:
JLM Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
When the Company is the intended recipient:
Olefins Terminal Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
A Party may designate a new address to which notices required or permitted
to be given pursuant to this Agreement shall thereafter be transmitted by
giving written notice to that effect to the other Parties. Each notice
transmitted in the manner described in this Article 12 shall be deemed to
have been given, received and become effective for all purposes at the time
it shall have been (i) delivered to the addressee as indicated by the
return receipt (if transmitted by mail), the affidavit of the messenger (if
transmitted by personal delivery) or the answer back or call back (if
transmitted by telecopier or other electronic means) or (ii) presented for
delivery to the addressee as so indicated during normal business hours, if
such delivery shall have been refused for any reason.
14. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the law of the State of Texas (without giving effect
to the laws, rules or principles of the State of Texas regarding conflicts
of laws.).
15. ENTIRE AGREEMENT.
This Agreement, together with the Exhibit, constitute the entire contract
among the Parties with respect to the subject matter hereof and cancels and
supersedes all of the previous or contemporaneous contracts,
representations, warranties and understandings (whether oral or written)
by, between or among the Parties with respect to the subject matter hereof.
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16. BINDING EFFECT; ASSIGNMENT.
This Agreement shall be binding upon the Parties and their respective
successors and assigns and shall inure to the benefit of the Parties and
their respective successors and permitted assigns. No Party shall assign
any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other Parties. No Person
(including, without limitation, any employee or credit or of the Company)
shall be, or be deemed to be, a third party beneficiary of this Agreement.
17. SEVERABILITY.
If any provision of this Agreement shall hereafter be held to be invalid,
unenforceable or illegal, in whole or in part, in any jurisdiction under
any circumstances for any reason, (i) such provision shall be reformed to
the minimum extent necessary to cause such provision to be valid,
enforceable and legal while preserving the intent of the Parties as
expressed in, and the benefits to the Parties provided by, this Agreement
or (ii) if such provision cannot be so reformed, such provision shall be
severed from this Agreement and an equitable adjustment shall be made to
this Agreement (including, without limitation, addition of necessary
further provisions to this Agreement) so as to give effect to the intent so
expressed and the benefits so provided. Such holding shall not affect or
impair the validity, enforceability or legality of such provision in any
other jurisdiction or under any other circumstances. Neither such holding
nor such reformation or severance shall affect or impair the legality,
validity or enforceability of any other provision of this Agreement.
18. HEADINGS.
The headings set forth in this Agreement have been inserted for convenience
of reference only, shall not be considered a part of this Agreement and
shall not limit, modify or affect in any way the meaning or interpretation
of this Agreement.
19. SURVIVAL OF REPRESENTATIONS.
All representations and warranties set forth herein shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
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20. AMENDMENTS; MODIFICATIONS.
No addition to, and no cancellation, renewal, extension, modification or
amendment of, this Agreement shall be binding upon a Party unless such
addition, cancellation, renewal, extension, modification or amendment is
set forth in a written instrument which states that it adds to, amends,
cancels, renews, extends or modifies this Agreement and which is executed
and delivered on behalf of each Party by an officer of, or attorney-in-fact
for, such Party. No such addition, cancellation, renewal, extension,
modification or amendment by the Company or to which the Company is a party
shall be effective unless the other Parties shall have given their prior
written approval thereto.
21. WAIVER.
No waiver of any provision of this Agreement shall be binding upon a Party
unless such waiver is expressly set forth in a written instrument which is
executed and delivered on behalf of such Party by an officer of, or
attorney-in-fact for, such Party. Such waiver shall be effective only to
the extent specifically set forth in such written instrument. Neither the
exercise (from time to time and at any time) by a Party of, nor the delay
or failure (at any time or for any period of time) to exercise, any right,
power or remedy shall constitute a waiver of the right to exercise, or
impair, limit or restrict the exercise of, such right, power or remedy or
any other right, power or remedy at any time and from time to time
thereafter. No waiver of any right, power or remedy of a Party shall be
deemed to be a waiver of any other right, power or remedy of such Party or
shall, except to the extent so waiver, impair, limit or restrict the
exercise of such right, power or remedy. No waiver by the Company shall be
effective unless the other Parties shall have given their prior written
approval thereto.
22. REMEDIES CUMULATIVE.
Except as otherwise provided in this Agreement, all rights, powers and
remedies afforded to a Party hereunder, by law, in equity or otherwise
shall be cumulative (and not alternative) and shall not preclude assertion
or seeking by a Party of any other rights or remedies.
23. COUNTERPARTS.
This Agreement may be signed in any number of counterparts, each of which
(when executed and delivered) shall constitute an original instrument, but
all of which together shall constitute one and the same instrument. This
Agreement shall become effective and be deemed to have been executed and
delivered by all of the Parties at such time as counterparts shall have
been executed and
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delivered by each of the Parties, regardless of whether each of the Parties
has executed the same counterpart. It shall not be necessary when making
proof of this Agreement to account for any counterparts other than a
sufficient number of counterparts which, when taken together, contain
signatures of all of the Parties.
24. CERTAIN EXPENSES.
Except as otherwise provided in this Agreement, each Party agrees to pay
all expenses, fees and costs (including, without limitation, legal,
accounting and consulting expenses) incurred by it in connection with the
transactions contemplated hereby.
25. NO PARTNERSHIP.
Nothing contained herein shall be construed as forming a partnership
between the Parties.
IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement
as of the date first above written.
OLEFINS TERMINAL CORPORATION JLM INDUSTRIES, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------- --------------------------------
Its: Vice President Its: Vice President
-------------------------------- --------------------------------
D-S SPLITTER, INC. ULTRAMAR DIAMOND SHAMROCK
CORPORATION
By:/s/ By:/s/
-------------------------------- --------------------------------
Its: Vice President Its: Vice President
-------------------------------- --------------------------------
OLEFINS MARKETING, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Its: Vice President
--------------------------------
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